We’re not surprised that Google is having a tough time fostering Google Wallet adoption. Google has a tough hill to climb.

What is surprising is that at least Verizon — and presumably AT&T — are still talking to Google about joining Wallet. Of course, both Verizon and AT&T have to date shunned Google Wallet for Isis, which is prepping to come to market with an NFC payments product.

Verizon reportedly told Bloomberg that “we are continuing our commercial discussions with Google on this issue.” And while AT&T declined to comment, it is not a stretch to expect it to likewise engage in discussions with Google.

The reported numbers out of Google Wallet are not good: just 50,000 to 100,000 downloads. Adoption isn’t likely to be higher than 10%, by our estimates.

Strikingly, Google is now talking about sharing Wallet economics with Verizon and AT&T to convince the two largest wireless companies to embrace the payments product. What that means is Google was not sharing the economics to date — no wonder Verizon and AT&T told Google to bug off. Sadly, I don’t see Google buying its way out of this one. The low adoption has put Google into a disadvantageous position. Any deal with Verizon and AT&T will likely make Google Wallet a borderline financial success at best.

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One Comment

Citi is not alone in this. There are many, many, many banks using this as a way to attract core deposits. Unfortunately, the FDIC is creating a potentially nasty funding crunch at the end of 2009, when the insurance is set to go back to the original limits. Year-end funding is bad enough as it is, factor in the possiblity of millions of dollars walking out the doors of banks and it becomes a nightmare. But who honestly believes that the increase will not become permanent?